The future of Cuban ballplayers in Major League baseball
Following the December 2014 announcement by U.S. president Barak Obama that he would establish diplomatic relations with Cuba, there has been much excitement and speculation about the potential for Cuban baseball players to enter Major League Baseball (MLB). In this article, I suggest that the posting system that MLB established with professional baseball in Japan and South Korea provides a useful model for Cuban players to come to the United States. If properly designed, the proposed system could proceed in spite of the Helms-Burton Act of 1996.
There were 19 Cubans on the opening day roster of MLB teams in 2014 (up from 15 Cubans in 2013). There were 83 players from the Dominican Republic on MLB teams in 2014. Cuba’s population is approximately one million larger than that of the Dominican Republic, so it is not unreasonable to assume that without the U.S. embargo there is the potential for the number of Cuban players to triple or quadruple.
The 19 Cuban players in MLB today had to defect in order to player in the United States.Any Cuban defector who wants to do business with an American company must first establish residency outside Cuba and the United States, a process that can take several months, depending on the country. Cuban players must also petition for free agency from Major League Baseball and be unblocked by OFAC before they can enter into a contract with a Major League club. As has been widely reported, in addition to formal delays, for the Cuban ballplayers their defection itself can entail great danger.
Background on the Posting System
In 1998, Major League Baseball (MLB) and Japan’s Nippon Professional Baseball (NPB) introduced the posting system. In its original form, MLB teams participated in a first-price, sealed bid auction to gain exclusive rights to negotiate a contract with a Japanese player. If the winning bid was acceptable to the owner of the NPB club, the winning bidder had 30 days to negotiate a contract with the posted player. If a deal was reached with the posted player, the MLB teams paid the NPB club an amount equal to its bid, plus, of course, the salary due to the player. If a deal was not reached within 30 days, the player returned to his NPB team and no payment was made.
The posting system evolved because of controversies over player transfers over the previous 40 years. During the 1960s, it was a common practice for Japanese teams to send players to train in MLB minor league systems. Masanori Murakami played in the San Francisco Giants farm system under such an agreement. When the Giants purchased Murakami’s contract, Murakami’s NPB club, theNankai Hawks, objected and pressured Murakami to return to Japan. After mutual threats of legal action, the two sides agreed that Murakami could play for the Giants for one year and then return to Japan.
This dispute led to the Working Agreement of 1967. The Agreement asserted that both leagues would respect each other’s reserve system that strictly limited player rights. As a result of the agreement, no Japanese player played in MLB for nearly 30 years.
In 1995, Japanese agent Don Nomura exploited a loophole in the 1967 Agreement that would allow superstar pitcher Hideo Nomo to play for an MLB team. Nomo would retire from the NPB, causing his team to release him from his contract. As a free agent, Nomo could play baseball in the United States. Nomo was a star pitcher for the Los Angeles Dodgers for three years.
Nomura then exploited the same loophole in 1998 for Alfonso Soriano. Although Soriano was not Japanese, he was under contract with an NPB team. Wanting to play for MLB, he announced his “retirement” at age 21 and signed with the Yankees.
Having lost Nomo and Soriano to MLB teams without compensation, the NPB and MLB began discussing a mutually acceptable means for transferring Japanese players to the United States. In 2012, MLB agreed to a similar posting system with the Korea Baseball Organization.
The NPB allows a Japanese player to obtain true free agency after eight years of service. An unrestricted free agent may leave Japan to play in the United States without compensation to the NPB team. The former Yankees’ star outfielder Hideki Matsui was an unrestricted free agent.
Players with less than eight years of experience must go through the posting system in order to play in the U.S. An NPB team may unilaterally decide to post one of its players. Alternatively, a MLB team is permitted to inquire about a player between November 1 and March 1 in any given year. If the NPB team agrees to post the player, it notifies the NPB Commissioner, who then informs the MLB Commissioner. The MLB Commissioner notifies all of the MLB clubs of the player who is being posted. The NPB team must make available all medical records it has regarding the player being posted.
Up to the end of the 2012–13 posting period, nineteen NPB players had been posted using the system. Of these, ten signed Major League contracts immediately, three signed minor league contracts, four were unsuccessful in attracting any MLB interest, and two could not come to a contract agreement during the 30-day negotiation period. The original posting system came under criticism for a number of reasons. The competition among MLB teams to win the bidding rights to negotiate with the Japanese player was unconstrained, leading to very high bids. The three highest-profile players who have been acquired by MLB teams through the original posting system are Ichiro Suzuki (in 2000), Daisuke Matsuzaka (in 2006), and Yu Darvish (in 2012). They attracted bids of $13.1 million, $51.1 million, and $51.7 million respectively.
Consider the case of Daisuke Matsuzaka who was signed by the Red Sox for six years and $52 million. The Red Sox had to pay the $51.1 million bid to the Seibu Lions of the NPB plus the $52 million to Matsuzaka for a total of $103.1 million over six years, suggesting that the Red Sox ownership believed that Matsuzaka was worth $17.2 million a year to the team. Matsuzaka, however, only received approximately half of this amount; the Seibu Lions got the other half. Many argued that this outcome exploited the player.
Another criticism was that only the richest clubs could afford to participate in the bidding process. This reinforced the existing advantages of the large city teams and created less competitive balance in the game.
Accordingly, MLB prevailed upon NPB to revise the posting system in December 2013. Under the new system, the NPB team sets the posting fee without bidding from MLB teams, but the fee cannot exceed $20 million. Any MLB team that is willing to meet the $20 million posting fee (which is only paid if a contract is reached) can negotiate with the player. This system both allows the player to receive a larger share of his expected value to the team and it enables the lower revenue teams to participate.
Application of the Posting System to Cuba
The new posting system could fit MLB-Cuba relations, with the modification that the fee would be paid to the Cuban government, not the individual teams. The exchange of ballplayers could be interpreted to fall under the cultural exemption to the embargo. To make the payment more politically palatable in the United States, it could be stipulated that the funds would have to be used to promote the development of baseball in Cuba, e.g., for stadium renovations, training camps or equipment.
MLB would benefit by raising the quality of talent in the league and lowering the risk factor for its future players. The players would benefit by not having to undertake the uncertainty and danger of defection, by maintaining their standing in Cuban society, and by more ready transfer to MLB for the most talented players. The Cuban government would benefit from the hundreds of millions of dollars it could earn in posting fees (to promote baseball on the island) and possibly by income taxes that would be paid by players choosing to retain their Cuban residency.Additionally, players in Cuba would likely be more motivated to perform at the top level, creating higher quality of baseball in Cuba. Cuban baseball fans would also benefit from the excitement of following their players in the major leagues, and perhaps a part of the exchange could grant television rights to the Cuban government to show some MLB games on television. MLB, in turn, would gain again by nurturing the Cuban market for the prospective post-embargo world.
A few wrinkles would have to be worked out. Among them, under the current MLB collective bargaining agreement, players from Cuba, Japan, South Korea and Taiwan who are under 23 or who have not played as a professional for five years in their home country are subject to signing bonus regulations. These regulations stipulate that each team can spend a total of between $2 million and $5 million on signing bonuses for such players and other international players (where the total allotment is an inverse function of the team’s win percentage in the previous year). These players would not be subject to the posting fee and their availability would have to be subject to a separate agreement between MLB and Cuba.
Citizens of the United States and Cuba have benefitted from the cultural, religious and educational exchanges that have been permitted to date. Adding ballplayer exchanges under the cultural exemption would be a win-win for both countries.
 Transfers of MLB players to the NPB are less of an issue. NPB rules do not allow teams to have more than three foreign players on the roster. Moreover, MLB players seem to be more inclined to remain in the United States. Most former MLB players who move to Japan have either been released by their MLB club or are veteran players nearing the end of their careers.
Andrew Zimablist is a U.S. economist and professor at Smith College. He also on the editorial board of The Journal of Sports Economy.